Debt Recovery FAQs
What is a demand letter?+
A demand letter is a written demand for payment of a debt within seven days from the date of the letter. It is also known as a “letter before action” as it informs the debtor of your intention to issue legal proceedings against them for recovery of the debt should the debtor fail to pay within seven days.
What is an Affidavit of Debt?+
An Affidavit of Debt is a legal document setting out particulars of the legal action against the debtor which must be sworn by the creditor in order to take up Judgment against the debtor for the amount outstanding.
Do you need the original affidavit of debt?+
Yes – the court requires the original affidavit of debt.
Why can't a solicitor swear their own client's affidavits?+
A solicitor who is independent from the legal action is required to witness the swearing of an affidavit as your own solicitor is prohibited from doing so.
Who is the Sheriff?+
A sheriff enforces the Judgment obtained against debtors for the collection of debt. There are Sheriff offices in counties Cork and Dublin. A Sheriff is a self-employed person paid for their enforcement work on a commission or “poundage” basis.
There is at least one sheriff responsible for each county in Ireland and usually operates out of the court offices.
Sheriffs have the power to enter the debtor’s property and seize goods. In entering a debtor’s property a sheriff must make reasonable efforts to do so peaceably although a Sheriff may make a forced entry. In some cases, a Sheriff may not seize goods where there are none to seize or the goods are of low value.
What is a European Enforcement Order?+
Within the EU, where a creditor brings a civil uncontested claim against a debtor, proves that their claim was properly served on the debtor and obtains a Judgment against that debtor, that creditor may apply to have the Judgment certified as a European Enforcement Order.
Once the European Enforcement Order has issued from the court, it may be sent to the enforcement authority of another EU country where the debtor resides or where their assets are located.
The country where the creditor wishes to enforce the European Enforcement Order must recognise that Order and the creditor will be able to enforce that Order under the usual rules of that country. Only if there is another Judgment in that other EU country between the same parties that is irreconcilable with the European Enforcement Order, will that other EU Country be entitled to refuse enforcement.
What is a Judgment Mortgage?+
Where a creditor obtains a Judgment against a debtor and the debtor owns any real property, the creditor may apply to the Court on Affidavit to have a Judgment Mortgage registered on the debtor’s interest in that property.
Is there interest on a Judgment?+
Under Irish law, interest of 2% is chargeable on the Judgment debt from the date of the Judgment.
Do I need to go to court?+
Not necessarily. If you issue legal proceedings against a debtor and they enter an Appearance and Defence to the claim then it may become necessary to obtain a hearing date where the matter cannot be resolved or settled.
What are the enforcement options?+
Each county in Ireland has a Sheriff assigned to it. It is the Sheriff’s job to visit the debtor’s premises and seize and sell goods or collect monies owed to cover the debt together with legal costs and interest accrued. At times there can be delays in the process and in some cases the Sheriff can decide that the debtor has no goods worth seizing or selling.
Registration of Judgment in the High Court
Once judgment has been obtained, it can be registered with the High Court which means that the Judgment will be published bringing it to public attention in magazines such as Stubbs Gazette.
Once Judgment has been obtained, you can apply to have a Judgment Mortgage registered against any property which the debtor owns. This effectively restricts the debtor’s ability to deal with the property for the period of the Judgment Mortgage unless the debt has been discharged to the owner of the Judgment Mortgage.
In this instance a debtor can be brought before the District Court to assess their means and ability to pay the debt with a view to the Court making an Instalment Order requiring the debtor to pay the debt by way of a lump sum or regular instalments. The instalments will begin once the order has been served on the debtor.
If the debtor fails to meet the conditions outlined in the Instalment Order then the creditor may apply to Court to seek to have the debtor committed to prison for non-compliance with the Instalment order.
A garnishee application may be taken out by the creditor where the creditor is aware that the debt owed can be paid by a third party who owes money to the debtor. The resulting garnishee order will direct the third party to pay the money to the creditor directly on behalf of the debtor in order to discharge the debt.
Should the debtor fail to pay the debt to you, despite Judgment having been issued, you have the option to petition the High Court to declare the debtor bankrupt. The process is quite costly and does not necessarily give the petitioning creditor any priority over other creditors.
Liquidation occurs where a debtor company is unable to pay. The creditor has the option to apply to court to wind up the debtor’s limited company. Even warning the debtor of this option may encourage them to pay the debt quickly to avoid having their company wound.
What is late payment interest and compensation?+
The issue of “late payment in commercial transactions” is governed by the European Communities (Late Payment in Commercial Transactions) Regulations 2012 – SI 580 of 2012.
Some of the main provisions of the legislation are:
Businesses should pay their invoices within 60 days. Where payment exceeds 60 days, the payment date must be expressly agreed in the contract and not be grossly unfair to the creditor.
In the absence of any agreed payment date between the parties, late payment interest falls due after 30 days has elapsed, provided the invoice is not subject to query.
Enterprises are automatically entitled, without the necessity of a reminder, to charge interest for late payments and compensation costs.
Statutory interest rate for late payment is 8% above the European Central Bank’s reference rate.
Enterprises can challenge grossly unfair terms and/or practices.
What is mediation?+
Mediation is the method of using a trained neutral facilitator known as a mediator, in order to bring about an agreement between two parties in dispute. Without taking sides or making judgements, they must lead an effective discussion between both parties.
What is outlay?+
Outlay are items that must be paid for in order to progress with a case. E.g. Court stamp duty, agent’s fee, commissioner for oaths fee etc.
What is stamp duty?+
Stamp duty, in the realm of legal proceedings, is a tax payable on certain legal documents.
Why are there different cost for different stages?+
Each step of the debt recover process involves a piece of work being carried out which incurs a cost. A creditor who issues legal proceedings may recover some of the costs associated with issuing those proceedings from the debtor and so on for taking up Judgment or having to take enforcement steps.
Why do we have to pay legal fees when we are the ones owed money?+
While it is possible to recover some costs from the debtor, you cannot recover all of your costs from the debtor. You are at all times responsible for your costs.